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A perfect fit for our business

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Best for Crypto Licenses

Best company for Crypto Licenses! Kudos to the team for making the incorporation of our company really smooth

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Fast and Reliable

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HISTORICAL AND LEGAL BASIS OF THE VARA REGULATION

Background of the VARA Regulation

The Dubai Virtual Assets Regulatory Authority (VARA) presented its Virtual Assets and Related Activities Regulations, which are now the legal basis for all crypto companies in Dubai. Its main goal is to establish rules, licensing requirements, exemptions, and sanctions for non-compliance for all Dubai VASPs, VA issuers, and other related businesses.

History of the VARA Regulation
The Law on Regulating Virtual Assets in the Emirate of Dubai established and authorized the Dubai Virtual Assets Regulatory Authority (VARA) in 2022 with the purpose of regulating Virtual Assets and Virtual Asset Providers (VASPs). Consequently, VARA issued its Virtual Assets and Related Activities Regulations in 2023. The final version of VARA was published on February 7, 2023, after the approval of the Board of Directors, setting forth a comprehensive framework for virtual asset issuers and VASPs licensed in Dubai.

Summary of the VARA implementation
VARA is affiliated with the Dubai World Trade Centre Authority (DWTCA) and is in charge of overseeing and regulating all the VA activities across the Emirate of Dubai including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre. The main goals of VARA implementation include:

Promoting Dubai as the international hub for crypto assets and boosting its competitive edge on the market;
Increasing awareness toward the VA sector in the Emirate and encouraging innovation;
Attracting young businesses to invest and license their companies in the Emirate;
Developing an adequate set of regulations, rules, and standards for the protection of customers and VA dealers in the Emirate.
The Dubai VA law and the VARA regulations apply to all Virtual Assets and VA activities in Dubai. While there are exemptions as to which entities are entitled to a license before commencing their operations and which are not, all of them must comply with the general regulations and directives of VARA, including AML-CFT policies, risk assessment, data management and security, and tax reporting.

LICENSING OF VASPS UNDER VARA

How to get a VARA crypto license in Dubai

The general licensing procedure for VASPs and related entities is thoroughly described in VARA regulations. While the majority of business models are obliged to secure a license before commencing their operations, some are exempt from this rule.

Implementation of the VARA framework
All entities that seek to provide one or more VA activities in Dubai must obtain a license by complying with the licensing requirements of VARA. Before carrying out any VA activities in the Emirate, future VASPs must fulfill the VARA conditions as set out in the Rulebook designed for their particular business model.

Rulebooks are an indispensable part of the VARA framework in Dubai since they lay out the licensing requirements for different types of VA activities. Companies can provide the following services under the VARA license:

Advisory Services;
Broker-Dealer Services;
Custody Services;
Exchange Services;
Lending and Borrowing Services;
VA Management and Investment Services;
VA Transfer and Settlement Services;
Virtual Asset Issuance.
For each business model, VARA provides a Rulebook with general licensing requirements, policies, procedures, public disclosures, licensing fees, and possible sanctions for non-compliance.

AML Compliance under VARA
VARA is compiled with the recognition of Federal Decree-Law No. [20] of 2018 on Anti Money Laundering, Combating the Financing of Terrorism and Financing of Illegal Organisations, Federal Law No. [7] of 2014 on Combating Terrorism Offences, and any other Federal AML-CFT Law present and recognized in the Emirate.

Consequently, VARA is responsible for regulating and supervising compliance with the relevant AML-CFT laws of every licensed entity engaged in VA activities.

Under the VARA license, VASPs must comply with all Federal AML-CFT Laws as well as all other regulations, Rulebooks, and FATF recommendations that may further be incorporated by VARA into the legal framework.

Supervision and examination under VARA
All licensed entities in the Emirate must comply with four basic Rulebooks, in addition to the specific Rulebook laying out the licensing and compliance criteria for their business model. These Rulebooks include:

Company Rulebook;
Compliance and Risk Management Rulebook;
Technology and Information Rulebook;
Market Conduct Rulebook.
In order to fulfill its obligations under the Dubai VA law, VARA must conduct regular investigations and/or examinations of the licensed bodies to ensure compliance with all four Rulebooks. At any time when VARA conducts an examination, the licensee must be able to provide it with all requested books and records in order to enhance and facilitate the examination.

VASPs and other licensed entities must ensure that VARA is able to determine the following:

The financial condition of the VASP or Issuer;
The safety and soundness of the conduct of its business, VA Activities, or Virtual Asset;
All management and/or operational policies of the VASP or Issuer;
Whether the VASP or Issuer has complied with the requirements of all applicable laws, Regulations, Rules and Directives;
Other matters as determined by VARA which may affect a VASP’s conduct of VA;
Activities and/or compliance with its licensing conditions.

Sanctions and fees under VARA
At its sole discretion, VARA may impose sanctions on licensed entities in the event of the following breaches or misconduct:

For violation of any law [including the Dubai VA Law and Federal AML-CFT Laws];
For any violation of these Regulations, or any Rules or Directives;
On any ground on which VARA might refuse to issue a Licence under these Regulations;
For Good Cause, when an Entity has defaulted or is likely to default in performing its obligations or engages in unlawful conduct or practices that may cause harm to the public;
For other grounds determined by VARA in exercising its powers, performing its functions, or fulfilling its objectives under the Dubai VA Law.

Crypto Licenses in VARA Regulation